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My answer is yes. Govt pensions are fair to taxpayers.
Work which the tax payer does not want to do gets done at a lower rate. Part of the payment goes into a retirement fund. If the retirement fund is run well then it should work. However when a political group decides to destroy the economy and blame the victims, it may look bad.
"at a lower rate" used to be the case, but I'm not seeing that as much anymore. The average Federal Gov't worker is making 2x the average private sector income now.
How do you feel about the Pension funds being underfunded (which nearly all are), and then the City/County/States Bond ratings suffer as a result and the taxpaying residents wind up paying more in interest on debt? There are pension abuses going on that hurt the pensioners and the taxpayers both.
Why do you think people work for the government? Because it offers a stable middle class life with a challenging career. You are free to apply for govt jobs. Uncle Sam underpays people, especially at the professional level. But people choose to still work because of delayed gratification, especially when it comes to retirement.
A huge number of jobs in the government are PhD and MD level scientists, engineers and physicians. Don't really want to hire idiots running and protecting the country or do you want the government to have a snowball's chance in hell vs private industry at hiring and retaining the best and brightest minds this country produces?
My neighbor protects pregnant women and children every single day from companies who want to test new ideas and treatments on them with faulty or manipulated science. She is on the SES scale and makes $182,000 and will probably have a sizable pension. I still think she's underpaid for how important her work is at protecting millions of people everyday. She could easily go to industry and make $200-300k doing consulting work or running a company's regulatory department, but she doesn't because some people have a higher calling than just making as much money as possible and like what they do. She also sticks around and takes lower salary for the pension. I sure as hell want someone with 30 years experience with vast pools of knowledge very few people on the planet have making decision about whether or not a company is allowed to test on children and pregnant women.
Federal workers also pay a ton of money into the system. It isn't free.
I agree with all that you say and thanks for your reply. The issues I have is the Fed Gov't worker now makes 2x the average American worker. 2x!
Secondly, some pensions kick in at just 25 years now. It used to be 30. And, some pensions are payng as much as 80% of last earned salary, and they have COLA's attached. I feel 80% is waay too much andis unsustainable. Not knowing what your neighbor's pension details are, I cannot comment on it. I do agree that these highly skilled progessionals that serve in gov't below their private sector pay grades deserve a fair pension, but rmember they traded lower pay for 100% job security as part of the deal.
So that would be invest in a 401k with a percentage matched by the taxpayers.
Do any of you people understand how pensions work? Run properly they fund themselves.
Get online and apply for a government job.
Thn why are the vast majority underfunded? When they are underfunded, that can potentially lower the gov't entity bond rating and cost the taxpayers extra money to fund debt.
The pensions are being run poorly in most cases, and that is part of the problem I have with them. They are Ponzi scheme's that have not yet imploded but in places like Illinois, Connecticut, New Jersey, & New York and a few other places they will implode soon.
Not trying to be argumentative or sarcastic--but can you tell what about them you think is too generous? I'm merely referring to federal government pensions versus state or local pensions as they are all over the map.
For a federal employee:
1. FERS pension: Employee kicks in 4.1% of the their salary towards the pension, the government pays a matching amount. This pension gives you 1% of your high-3 years salary times the number of years you worked. For simplicity, if you top out at $100,000 a year, and work for 25 years, your pension will be $25,000 per year.
2. Thrift Savings Plan (AKA, 401K). Funded by employee with a government match. The first 3% is match dollar-for-dollar and the next 2% is matched 50 cents on the dollar.
3. You can continue to purchase your healthcare after retirement.
Now, I think that's a fairly standard pension as pensions go. My husband has a pension from his private sector company that is far more generous than this. His pension will be approximately $55,000 per year. He also gets a fully funded annuity (401K-type thing) that he does not contribute to at all that is now sitting at about $500,000. He gets a gap health insurance policy for free.
Pensions & other benefits your husband enjoy have mostly left the private sector. They must honor their promises to retirees, but they have mostly stopped offering these kind of deals to new employees, and are actively trying to buy out current plan participants (which I was 25 years ago after having only minimal vesting).
The public pension plans you outline sound reasonable to me. The only ? I would have is are they being properly managed? Are the management fees fair and comparable? Is the pension plan being properly
funded, or is it being raided to pay for non pension plan costs? Is all this transparent?
Pensions & other benefits your husband enjoy have mostly left the private sector. They must honor their promises to retirees, but they have mostly stopped offering these kind of deals to new employees, and are actively trying to buy out current plan participants (which I was 25 years ago after having only minimal vesting).
The public pension plans you outline sound reasonable to me. The only ? I would have is are they being properly managed? Are the management fees fair and comparable? Is the pension plan being properly
funded, or is it being raided to pay for non pension plan costs? Is all this transparent?
For the federal pension (FERS) that I quoted, I believe it is transparent. Congress raids it routinely though and puts a big fat IOU in the pot.
I had a conversation with a colleague this month who was complaining about how difficult it was to hire nurses at a state level. She has close ties to the state as our group is infectious disease based.
The state government of Florida hire nurses at 45-48k annual
Private sector hospitals are hiring new graduate nurses at 55k+ And sign on bonus of 10,000.
And good luck hiring one with an experience, that will run you 60k+ a year.
So the only nurses they have left to choose from are ones close to retiring who are tired of being in the hospital. Those that can’t find a job anywhere else because they’re horrible nurses. Or of those that have a spouse to supplement their income so they can afford to work with the state.
This problem extends to many areas in the state government and they are the ones making most of the decisions in the state. Politicians set platitudes and ideas but don’t make the actual agency policy, these folks do that. Just look to Flint Michigan to see what incompetence looks like at a state level.
So if you don’t offer a pension, underpay on wages, and continue to reduce healthcare offerings then why the hell would anyone work for the state.
Keep in mind these are the people treating things that private providers won’t treat like Tuberculosis, Hansen’s disease ect.
What are private sector workers supposed to do if they don’t have a pension? Starve?
Reportedly, only 32% of employees have a 401k. 49% of employers do not offer a match.
Reportedly, nearly half of adults have no savings.
Here's what you are supposed to do: live below your means so you can save for your future retirement.
-If you dont have a 401K, you likely qualify for IRA's which you should be maxing out each year.
-You should be taking advantage of college savings plans, if you have kids.
-You should be taking advantage of HSA's (healthcare savings plans) for your family's health costs like deductibles, and costs that insurance doesn't cover.
If you do this from an early age and do it every year w/o robbing from these savings, you'll be just fine.
Thn why are the vast majority underfunded? When they are underfunded, that can potentially lower the gov't entity bond rating and cost the taxpayers extra money to fund debt.
The pensions are being run poorly in most cases, and that is part of the problem I have with them. They are Ponzi scheme's that have not yet imploded but in places like Illinois, Connecticut, New Jersey, & New York and a few other places they will implode soon.
I’m not sure where you are getting your information, but the NY state pension fund is not close to “imploding”; it’s actually now has a funding ratio of 94.5%, making it one of the strongest public pension funds in the country.
Guarantee many of those are NY and NJ cops and teachers. Cops are notorious for rubbing it in other peoples faces how their unions are screwing over taxpayers. At some point they will at a minimum have to start taxing out of state pension holders who aren't paying anything into the gravy train their on through property taxes or sales tax.
As a metter of fact...yes, that is what they are. The Feds seem to stay quieter about theirs.
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